By Sabrina Valle
HOUSTON (Reuters) – U.S. and European oil companies reported lower first-quarter results on Friday due to a sharp drop in natural gas prices compared to last year.
In the United States, Exxon Mobil missed Wall Street profit targets due to a larger-than-expected decline in natural gas profits and Chevron beat moderate expectations with better-than-expected U.S. oil production.
French oil major TotalEnergies also slightly beat analysts’ forecasts, as strong refining margins partially offset a sharp decline in natural gas profits. CEO Patrick Pouyanne, however, warned that rising oil prices, which have offset weak natural gas profits, could reduce refining margins later this year.
Exxon’s profits fell 28%, Chevron 16% and TotalEnergies 22% year-on-year, with the two US oil majors also suffering the consequences of falling profits from gasoline and fuels.
Oil and gas company profits continue to decline from record levels in 2022, driven by a surge in demand after the COVID-19 pandemic and then soaring prices after the invasion of Ukraine. Russia.
Henry Hub futures, the benchmark for U.S. gas, are trading below $1.70 per million British thermal units (mmBtu) and fell earlier this year to their lowest level in 3 1/2 years due to hot weather and oversupply.
Global benchmark Brent crude prices remained largely stable from a year ago at $81.76 per barrel during the quarter.
Strong profits last year led Exxon, Chevron and Occidental Petroleum to bid on rivals in hopes of generating higher oil and gas production.
Exxon reported a profit of $8.5 billion, its second highest first-quarter profit in more than a decade, while Chevron earned $5.5 billion and TotalEnergies generated $5.1 billion in adjusted net.
Stock prices reflected the decline in profits, with Exxon down 3.6% and Chevron down 1% in midday trading in New York. TotalEnergies rose 2.6% in Paris after reconfirming a $2 billion share buyback.
Executives gave no new guidance on their production outlook for coming quarters during conference calls, giving investors less reason to celebrate.
The outlook for the two largest U.S. oil companies depends in part on the pending approval of two takeover offers.
Exxon aims to complete its purchase of Pioneer Natural Resources in the current quarter, it said. Chevron said its offer for Hess was moving forward and was expected to be put to a shareholder vote in late May.
(Reporting by Sabrina Valle in Houston, America Hernandez in Paris and Mrinalika Roy in Bengaluru; editing by Marguerita Choy)
